Riders with Term Insurance- What Are Your Options?

A term insurance rider is an additional cover that you could opt for over and above your policy. Available at an extra cost (apart from the premium you would be paying for your base policy), riders let you enhance your protection and customize the policy to suit specific needs.

Do You Need a Rider?

Riders are a provision, of course at an extra cost, to let you get the most of your term insurance plan. You could:

Customize your existing insurance cover

Meet specific risks at affordable costs. Opting for a rider is a more cost effective option instead of having to take a separate policy for the same risk.

Option of going in for multiple riders for a more comprehensive cover.

Can be attached to any kind of insurance policy

Get a tax break under Section 80C and 80D depending on the nature of rider

If you find your term plan inadequate and seek a far more comprehensive cover and protection against specific risks, riders are a good option to enhance your life policy.

Your Guide to Riders with Term Plan

From the choice of riders available you could choose one or more to enhance protection. There really isn’t any restriction on the number of riders one could opt for, however the Insurance Regulator has specified that the premium on the rider should not be more than 30% of the premium paid for the base insurance policy. Costs vary from rider to rider generally costing in the range of 5 to 10% of your base policy premium.

Accidental death benefit:

Accidental death benefit rider is an additional protection over and above the sum assured of your base policy. This rider provides your nominee an additional lump sum in case death occurs due to an accident. In case of non-accidental or natural causes of death, the base sum assured would be paid anyways. For example if you have a base term plan of 40 lakhs with an accidental death rider for 15 lakhs, in such a case, a natural death would get your nominee the sum assured of Rs. 40 lakhs. In case death were to be due to an accident, your nominee would be paid an additional 15 lakhs i.e. a total of Rs. 40+ Rs. 15= Rs. 55 lakhs. Recommended for all individuals irrespective of the life stage, he is in.

Waiver of premium:

This rider ensures your base policy continues in the event of nonpayment of premiums. Loss of job, temporary disability or financial constraints may often make it impossible to make premium payments. This is where a waiver of premium benefit rider comes in handy. It keeps your policy in force and waives of all future premiums. Thus ensuring you stay protected for the remaining term of the plan.

Income benefit rider:

Loss of a regular stream of income is one of the major setbacks financially for the family in case of the bread winner’s death. This is where an income benefit rider serves as an advantage. It provides the family with a source of supplementary income along with the regular sum assured. This income could be for a period of 5 to 10 years where 10% of the rider sum assured is paid out. This is done annually to the beneficiary, on each policy anniversary.

Critical illness rider:

This rider meets expenses of life threatening critical ailments. It pays you a guaranteed amount if you are unexpectedly diagnosed with a critical ailment such as a stroke, cancer, heart attacks, kidney failures or bypass surgery. The list of critical ailments varies from insurer to insurer. This rider though predominantly clubbed with health insurance plans are also offered along with life insurance plans. However in such a case, the policy coverage may be reduced.

Permanent and partial disability rider:

Often clubbed with accidental insurance this rider offers protection in case of permanent or partial disability due to an accident. Do note the rider may pay you only in case of disability due to an accident. The rider pays a percentage of the sum assured over 5 to 10 years or till the expiry of the rider. It helps to overcome temporary/ permanent loss of income due to the disability.

Making Your Choice

Though riders cost far lesser than stand alone policies, it is always recommended you opt for a rider at the inception of the policy itself, as the earlier in the policy you take a rider the cheaper it could be. Many insurance companies in fact insist you opt for riders at policy inception itself. From among the list of riders available, making a choice must stem primarily from your individual need. To begin with evaluate your lifestyle, family history, circumstance and occupation. It would give you an idea about the specific risks you could be exposed to on a daily basis.